What effect does the presence of natural resources have on economic

development?

Jacob Moy

Defining Abundance/Scarcity

SXP SXP80

Bangladesh 0.01 0.2

Nigeria 0.14 0.30

Norway 0.10 0.22

Taiwan 0.02 0.01

• SXP (Sachs and Warner 1997), SXP80

• Affirming our case studies: – Oil production– Primary exports

The Findings

• Affirms “Dutch Disease Theory”– Resource abundance is

an impediment to economic growth

• What about Norway?

1970-80 1980-90 2006

World 3.8 3.2 4.0

Developing 5.8 3.9 7.1

Developed(Europe)

3.0 2.6 2.9

Nigeria 4.4 2.3 5.3

Norway 4.7 2.6 2.9

Bangladesh - 3.9 6.5

Taiwan 9.6 8.5 4.9 (est.)

Real GDP Growth Rates (USD-1990 Base)

Data: UNCTAD Handbook of Statistics 2008

Elaborations:

1970-80 1980-90 2006

Major Petroleum Exporters: Developing

6.9 0.5 6.1

Non-Major Petroleum Exporters: Developing

5.4 4.5 7.3

Real GDP Growth Rates (USD-1990 Base Year)

Data: UNCTAD Handbook of Statistics 2008

Summing Up

• Resource abundance impedes economic development– Poor diversification– Rent-Seeking Behavior– Short Sightedness

• Other Indicators of Poor Development?